What is an 'Interim Manager' in the context of Hck Hot Chicken's step-in rights?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
In order to prevent any interruption of operations which would cause harm to the Franchised Restaurant, thereby depreciating the value thereof, Franchisor has the right, but not the obligation, to step-in and designate an individual or individuals of its choosing ("Interim Manager") for so long as Franchisor deems necessary and practical to temporarily manage the Franchised Restaurant: (i) if Franchisee fails to comply with any System standard or provision of this Franchise Agreement and does not cure the failure within the time period specified by the Franchise Agreement or by Franchisor; (ii) if Franchisor determines in its sole judgment that the operation of the Franchised Restaurant is in jeopardy; (iii) if Franchisor determines in its sole discretion that operational problems require that Franchisor operate the Franchised Restaurant; (iv) if Franchisee abandons or fails to actively operate the Franchised Restaurant; (v) upon Franchisee's (or Franchisee's Operating Principal, if an entity) absence, termination, illness, death, incapacity or disability; or (vi) if Franchisor deems Franchisee (or Franchisee's Operating Principal, if any entity) incapable of operating the Franchised Restaurant ("Step-in Rights").
If Franchisor exercises the Step-In Rights:
(a) Franchisee agrees to pay Franchisor, in addition to all other amounts due under this Franchise Agreement, the Interim Manager's compensation and any direct out-of-pocket costs and expenses in connection with the exercise of such Step-In Rights;
(b) all monies from the operation of the Franchised Restaurant during such period of operation by Franchisor shall be kept in a separate account, and the expenses of the Franchised Restaurant, including Franchisor's costs and expenses and the compensation and direct out-of-pocket costs and expenses for the Interim Manager, shall be charged to said account;
(c) Franchisee acknowledges that the Interim Manager will have a duty to utilize only reasonable efforts and will not be liable to Franchisee or its owners for any debts, losses, or obligations the Franchised Restaurant
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, an 'Interim Manager' is an individual or individuals designated by the Franchisor to temporarily manage a Franchised Restaurant under specific circumstances. Hck Hot Chicken retains the right, but not the obligation, to step in and appoint an Interim Manager to prevent any interruption of operations that could harm the restaurant's value. This 'Step-in Right' allows Hck Hot Chicken to ensure the continued operation and maintenance of standards at the franchise location.
Several conditions trigger Hck Hot Chicken's right to appoint an Interim Manager. These include the franchisee's failure to comply with system standards or any provision of the Franchise Agreement without rectifying the failure within the specified time, a determination by Hck Hot Chicken that the restaurant's operation is in jeopardy, operational problems that necessitate Hck Hot Chicken's intervention, abandonment or failure to actively operate the restaurant by the franchisee, or the absence, termination, illness, death, incapacity, or disability of the franchisee or their Operating Principal. Additionally, Hck Hot Chicken may step in if it deems the franchisee or their Operating Principal incapable of operating the restaurant.
If Hck Hot Chicken exercises its Step-In Rights, the franchisee is responsible for covering the Interim Manager's compensation, as well as any direct out-of-pocket costs and expenses associated with the manager's role. All revenue generated during the period when the Interim Manager is in charge will be kept in a separate account, from which the restaurant's expenses, including Hck Hot Chicken's costs, the Interim Manager's compensation, and other related expenses, will be paid. The Interim Manager is only required to utilize reasonable efforts and will not be liable to the franchisee or its owners for any debts, losses, or obligations incurred by the restaurant during their management.
It is important for prospective franchisees to understand the implications of Hck Hot Chicken's Step-In Rights and the role of the Interim Manager. Franchisees should be aware of the conditions under which Hck Hot Chicken may exercise these rights and the financial responsibilities associated with the appointment of an Interim Manager. Furthermore, franchisees should consider the limitations of liability for the Interim Manager and Hck Hot Chicken, as well as their own responsibility to indemnify and hold Hck Hot Chicken harmless for the Interim Manager's actions or omissions.